The February unemployment rate dropped yet again on a huge decline of those not considered part of the labor force anymore. The official unemployment rate is now 5.5%, a -0.2 drop from last month. The labor participation rate is at 37 year record lows. From a year ago, the number of people considered not in the labor force has increased by 1.5 million.
An investigation by ProPublica and NPR has found that Republican state legislators (on behalf of lobbyists working for their local chamber of commerce) have passed laws that cut worker compensation insurance benefits to save employers money. Because of this, now the U.S. taxpayers have to pick up the added costs in Social Security disability, Medicare and Medicaid.
Though Keynes raised many good questions, and made a critical observation regarding wage formation which I've adopted, I will argue he ultimately fumbled at the one yard line. Complicating such a claim is the fact that there are numerous interpretations as to what Keynes "really really" meant. As a result, I will restrict myself to a couple core concepts that are generally treated as traditional Keynesian.
The Manufacturers' Shipments, Inventories, and Orders report shows factory new orders declined by -0.2% for January. The reason was most likely oil as nondurable goods new orders plunged by -3.1%. Petroleum refinery shipments give another clue as they plunged by -11.6%. Durable goods new orders by themselves increased 2.8%.
ADP's proprietary private payrolls jobs report gives us a monthly gain of 212,000 private sector jobs for February 2015. January's ADP private payroll gains were strongly revised, from 213,000 to 250,000. Financial activities had the highest job growth by ADP's records since 2006, while manufacturing only gained 3,000 jobs.
Ninety percent of the drop in the labor force since the Great Recession is attributed to young prime-age workers going on Social Security disability. OMG!!! Can this be true? Would the new CBO lie?
If you want to get a liberal's blood boiling, simply mention the phrase Supply-Side Economics at the next cocktail party. Be extra careful not to toss in additional synonyms, such as Reaganomics, Voodoo or Trickle-down economics, because his fuse might pop. Should I find myself at such a party, I would try to play peacemaker by asking the party attendees to consider the possibility that both the Left and Right share the same core economic defect: free trade. In other words, nearly all schools of economics amount to Voodoo.
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